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New Poll on the Economy Shows How Tough Policy Choices Will Be

June 29th, 2008 . by economistmom

Back from vacation–as of 2 am this morning!

Thanks to Bob Bixby for pointing out this new LA Times/Bloomberg poll on the economy to me.  From the story, several lessons on economic policy are learned.

First, it’s obvious that tying your economic platform to some continuation of the “Bush Economy” is not going to win you many votes:

Nine percent of respondents said the country’s economic condition had improved since Bush became president, compared with 75% who said conditions had worsened. Among Republicans, 42% said the country was worse off, while 26% said it was about the same, and 22% thought economic conditions had improved.

Second, no matter what economists try to explain about gasoline prices, the basic laws of supply and demand, and the near mpossibility of government being able to counter natural economic forces, people will blame the government for either causing the high prices or not doing enough to prevent them.  The last thing people do is think that they themselves might have anything to do with the high prices.  (Did I mention that our family was driving a big SUV during our vacation?  More on that later.)

Asked for their view of the cause of the higher [gasoline] prices, respondents blamed the Bush administration and oil company profits in roughly equal measure — 29% holding the administration responsible and 25% blaming the oil companies, a spread within the poll’s margin of error.

Thirteen percent of those polled said commodities speculators were responsible for the increases; 14% said they were not sure who was at fault.

Amber Guckenberg, a 28-year-old stay-at-home mother in Kalispell, Mont., said she wasn’t sure Bush deserved all the blame for rising energy prices, but she wished he had found a way to rein them in.

(Makes it easy to understand why the politicians have felt compelled to suggest such things as gasoline tax holidays and windfall profits taxes, doesn’t it?)

And finally, here’s the part that’s most interesting to me.  Concern about the deficit as a “top priority” seems to be growing, but many more people (more than half of the respondents) think a top priority should be to do things that would most likely increase the deficit:

Though respondents had strong opinions about the economy, they were not sure how to make it better. Asked what the top priority for improving the economy should be, 27% said cutting taxes, 20% said reducing the federal deficit, 13% said funding public programs and 13% said addressing the price of energy.

It’s also likely that here, too, as with gasoline prices, there’s a lot of “cognitive dissonance” going around, where people choose to believe that the lower taxes or increased government spending that they want would not have an adverse effect on the federal budget, but might even improve the budget outlook.  (Hence, tax cuts that pay for themselves, and infrastructure projects that would pay off just like the Hoover Dam, are born.)

Thanks to Brooks who pointed out this NYTimes op-ed on ”cognitive dissonance” (and how it affects campaign strategies) to me.  I was drawn to this one passage mentioning Oliver Wendell Holmes…

In 1919, Justice Oliver Wendell Holmes of the Supreme Court wrote that “the best test of truth is the power of the thought to get itself accepted in the competition of the market.” Holmes erroneously assumed that ideas are more likely to spread if they are honest. Our brains do not naturally obey this admirable dictum, but by better understanding the mechanisms of memory perhaps we can move closer to Holmes’s ideal.

…because I once wrote an op-ed which opened with the famous (but I guess naive?) quote from Holmes:  “Taxes are what we pay for a civilized society.”  Hmmm…

Note that the authors of that NYTimes op-ed are (my emphasis, and link to prior post of mine, added):

Sam Wang, an associate professor of molecular biology and neuroscience at Princeton, and Sandra Aamodt, a former editor in chief of Nature Neuroscience, are the authors of “Welcome to Your Brain: Why You Lose Your Car Keys but Never Forget How to Drive and Other Puzzles of Everyday Life.”

 Wow!  I’ve got to get that book!

2 Responses to “New Poll on the Economy Shows How Tough Policy Choices Will Be”

  1. comment number 1 by: moe

    Democrats’ Empty Rhetoric on Oil Prices.
    1. OPEC should pump more oil.
    Only more oil supply from OPEC (not from the US…) can bring down prices…

    2. Drilling for oil in the US will not have an impact on oil prices.
    Drilling for oil in ANWR, Off Shore, Oil Shale and Oil Sands will add millions of barrels daily to the oil market.

    3. Stop filling up the Strategic Petroleum Reserve.
    Daily DOE purchases of just 76,000 barrels will not have an impact on oil prices. President Bush was right on the button on this argument. This move had no impact on the oil market since it was announced in May.

    4. Only (expensive) alternative energy can bring down oil prices.
    If the rule of supply and demand doesn’t apply to oil prices and increasing supply won’t shift the lower prices, why would a decrease in oil demand help.

    5. “Big Oil” already leases millions of acres, but they don’t drill to keep prices high.
    Didn’t you just argue that drilling won’t bring prices down?
    (To get a brief explanation on this issue click here, here and here.)

    6. The Oil Companies are pushing for new drilling to make more profit.
    This contradicts your previous argument, Stupid.

    7. End Oil Speculating.
    As if Speculators only trade one way. If it’s for empty speculation, why doesn’t the DJIA go up to 35,000 points? (For a “Liberal” dispute of this argument click here)

    8. Tax the Oil Companies.
    How will this affect the price of oil?

    9. The current price of oil is a result of Bush’s failed energy policies.
    The price of Crude was at approximately $65-$70 when the Democrats took control of congress. It’s currently at $137, a 100% increase. The price of Gasoline was at approximately $2.33 when the Democrats took control of congress. It’s currently at $4.10, a 76% increase.

    If it wasn’t for the Democrats resistance to increasing oil production for the last 13 years, we would have been busy debating other issues at this time.

    http://welovebush.blogspot.com/2008/06/democrats-empty-rhetoric-on-oil-prices.html

  2. comment number 2 by: Brooks

    Diane,

    While not exactly analogous to the examples you mention in your post, as I read the post one incident I recalled was when, in 2000, one of my very partisan Republican friends started parroting Dubya’s line that we should have a big tax cuts to return the surpluses to the taxpayers because “It’s the people’s money, not the government’s money!” In response, I asked my friend (rhetorically), “Oh yeah, and whose national debt is it?”